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Business
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See figure 2.
Equilibrium Market Price: $82.50 (per MWh)
Conceptually, the new equilibrium price is a result of a rightward shift of the demand curve.
Figure 2
(c) What happens to the price if a drought takes the run-of-river plants out of operation? Consider the impact both during periods of high demand (20,000 MW) and low demand (19,000 MW)...
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Comment.
The approach used in (a) and (b) is again taken here. In this situation, however, run-of-river plants produce zero supply due to drought. See Appendix B. As a result, the industry supply curve shifts left. See figure 3.
During Periods of Low Demand:
Equilibrium Market Price: $84.50 (per MWh)
Overall Impact: $12...
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